Criteria and Standards for the Application of Constructive Loss in the Legal Systems of Iran and England
Keywords:
Judgmental loss, bona fide customer, fairness rule, official document, british law, iranian lawAbstract
Transactions and transfers conducted between individuals may, after the conclusion and full execution of the contract, become subject to ownership claims by the original owner. The owner may seek restitution of the sold property, while the secondary owner attempts to retain possession of the property. Although Iranian law has recognized the concept of constructive loss, unlike English law—which has applied this doctrine in clearly defined instances aimed at preserving transactional stability and protecting bona fide parties—Iranian law has accepted it within a framework characterized by ambiguity and inconsistency. The principal questions addressed in this descriptive-analytical study concern the instances in which constructive loss has been applied in Iranian and English law, as well as the position adopted by judicial practice toward this doctrine. The findings of the research indicate that both Iranian and English law recognize constructive loss in cases involving successive transfers, registration of official documents, and alteration of the nature of property. However, in English law, these instances have been recognized with greater transparency by both legislators and judicial practice, such that English law employs this doctrine in support of public order, contractual stability, and the protection of bona fide parties. In Iranian law, this divergence of opinion is likewise reflected in judicial practice; nevertheless, in recent years there has been an increasing tendency to issue rulings based on constructive loss rather than ordering demolition of buildings or restitution of property, particularly with respect to properties supported by official title deeds.
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Copyright (c) 2025 Mahmood Toosi (Author); Ramazan Dehghan; Mehdi Zolfaghari (Author)
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